Early Withdrawal of IRA


N

neal

I lost my job a couple of years ago and had to cash in my
IRA since I exhausted all my financial resources. Can I
claim a hardship and get back the 10% penalty for early
withdrawal? If so, how do I do it? Can I get back the
penalty for 2002? If so, how do I do an amendment to the
2002 tax return?
 
Ad

Advertisements

P

Phil Marti

I lost my job a couple of years ago and had to cash in my
IRA since I exhausted all my financial resources. Can I
claim a hardship and get back the 10% penalty for early
withdrawal?
No. See Publication 590 for a list of the situations which
avoid the penalty. If one applies, you can amend a
prior-year return on Form 1040-X.

Phil Marti
Topeka, KS
 
Ad

Advertisements

A

A.G. Kalman

neal said:
I lost my job a couple of years ago and had to cash in my
IRA since I exhausted all my financial resources. Can I
claim a hardship and get back the 10% penalty for early
withdrawal? If so, how do I do it? Can I get back the
penalty for 2002? If so, how do I do an amendment to the
2002 tax return?
Financial hardship is not one of the allowable exceptions to
the 10% early withdrawal penalty for an IRA. However, see
pages 49 and 50 in IRS Pub 590 for exceptions for
unreimbursed medical expenses and for payments of medical
insurance premiums. Read the rules carefully to see if you
qualify.

If you do qualify, you have to file Form 1040X (amended
return for 2002) and attach a revised Form 5329 with the
proper exception code.

http://www.irs.gov/publications/index.html
Also note that many states extract an early withdrawal
penalty as well (2.5% in CA for example). Don't forget to
amend any state tax return if you amend the federal.
 

Ask a Question

Want to reply to this thread or ask your own question?

You'll need to choose a username for the site, which only take a couple of moments. After that, you can post your question and our members will help you out.

Ask a Question

Top